The Federal Deposit Insurance Corp.’s move last week to take 200,000 square feet of space in Irvine Company’s empty 40 Pacifica tower was heralded as a boost for a battered commercial real estate market.
Now some are counting on a boost for a hard hit segment of the job market.
The FDIC is in the early stages of what is expected be a hiring binge, bringing 600 or more high-paying finance-related jobs to Irvine during the next few years.
The office, which will open in phases starting in December, will be used to manage receiverships and to sell off assets from failed banks, primarily those in the Western U.S.
Other locations in Irvine and in Pasadena had been under consideration for the office. The Inland Empire also made a push to land the federal corporation as a tenant.
The deal will have “a positive effect on the entire market, any way you look at it,” said Kurt Strasmann, managing director of Orange County brokerage operations for Santa Ana-based Grubb & Ellis Co.
“It’s a huge positive for the office market, and the entire real estate market. More importantly it means jobs,” he said.
The plan for staffing up the office still is being worked out. The space is expected to hold about 600 employees, according to the FDIC, although closer to 800 could fit in the space comfortably.
The number of jobs needed for the FDIC’s Division of Resolutions and Receiverships satellite office in Irvine will be based on the number of bank closings that occur west of the Rocky Mountains.
The FDIC said it will hire non-permanent employees and contractors for the office. It’s the first big, national example of the federal government adding people to handle the ongoing financial crisis.
Early postings on the agency’s Web site list openings for a number of management positions, including “resolutions and closing managers.”
Jobs listed so far are largely being advertised to current FDIC employees looking to relocate to Irvine.
The salary ranges for the Irvine jobs listed so far run from $95,000 to $170,000.
If the FDIC isn’t skimping on salaries, it could be because it appears to have saved a good deal in rent for the three-year lease, which includes two one-year options.
Financial terms of the deal weren’t disclosed. Some real estate sources say the FDIC is believed to be paying close to $20 million for the first three years of the 40 Pacifica lease, which would put monthly rents there near $2.75 per square foot.
When the 310,000-square-foot tower was being built during the peak of the local commercial real estate market a few years ago, Irvine Co. was advertising monthly lease rates of more than $4 per square foot for much of the building.
One-Off Deal
Tenant brokers said the lease is likely to be justified as a one-off deal for Irvine Co.,the county’s dominant landlord,to fill the new building during tough times and isn’t likely to be replicated for other deals.
The short lease “works in both the FDIC’s and our interest,” said Val Wheeler, president of the Irvine Co.’s office properties division. “By the time the lease ends, hopefully the economic turnaround is under way.”
With the lease signed, Irvine Co. now is readying itself for a hectic schedule of tenant improvement work to get the office ready for occupancy.
Right now, the empty, 15-story office tower consists of raw space, with little internal improvement work completed. The FDIC is leasing nine of those floors.
Irvine Co. plans to deliver two to three floors to the FDIC every month, according to Wheeler. The developer will be using its own employees, as well as a general contractor, for tenant improvement work on the space.
Irvine-based LPA Inc. is handling the interior design and architectural work on the space.
Most sizable office leases can take upward of a year to be completed. Buzz about a possible FDIC lease in the Southland only began picking up last month.
The opportunity “came out of the blue,” Wheeler said.
The FDIC is leasing the third through 11th floors, with Irvine Co. still looking to land a big tenant or two to take up the remaining floors at the top of the building.
The FDIC by far will be the biggest tenant Irvine Co. has landed at 20 and 40 Pacifica, twin 15-story towers the developer recently built alongside the San Diego (I-405) Freeway.
20 Pacifica opened last fall and is about one-third full. The building holds a number of small and midsize tenants, and includes the local operations of UBS Financial Services Inc., which takes up the top floor.
40 Pacifica was completed earlier this year and left empty in the hopes of landing larger tenants that would take up three floors of space or more.
